Economy

Asked what he thought about reports of central banks easing financial strains and that the Euro may collapse, the PMS said he did not want to explain the announcement made by the central banks. They had said they were enhancing their capacity to provide liquidity to the global financial system. The PMS said there were strains in the financial markets at the present time and that the central banks were ensuring they could help ease those strains and help the supply of credit into the economy.

Asked if this was akin to the 2008 crisis, the PMS said this was sensible contingency planning because this was a very serious situation in the financial markets at the present time. We are experiencing a credit crunch and the central bank action was about trying to mitigate the effects of that credit crunch.

Asked about Government preparations, the PMS said there was contingency planning going on, involving the HM Treasury, the Bank of England and the Financial Services Authority, and we would expect them to keep in close touch and monitor the situation carefully. Asked if he thought the Euro would collapse, the PMS said that the central banks’ announcement should not be interpreted in that way. They were ensuring they had the capacity to respond to strains in financial markets.

Asked if the Prime Minister had met the Governor of the Bank of England in the last 48 hours, the PMS said the Prime Minister saw him on a reasonably regular basis, and sometimes joined meetings with the Chancellor.